An umbrella agency to allow councils to borrow money more cheaply is up and running.
The Local Government Fund Agency is owned by 18 councils and the Crown. It has an AA+ rating from Standard & Poor's and Fitch, the same as the Government.
LGFA chairman Craig Stobo says the new bonds should be attractive to a wider range of investors globally, and Europe's current debt problems means it's a good time to launch it.
He says from an investor perspective the new bonds will offer security, and it's a security that's guaranteed by councils, so effectively ratepayers of New Zealand are backing the agency.
Mr Stobo says the agency expects the demand from councils to be such that the agency will be issuing more than $1 billion in the first three quarters of next year and as more shareholder borrowers are signed up through the course of the year that number's should increase.
He says there is roughly $5 billion of local government issuance in the market place today. Under current 10-year plans, councils expect an aggregate for that number to go closer to $11 billion.
